Five types of information needed for a business valuation report

A business valuation report is an important document for every small and medium business. A business valuation lets the business owner know about the actual market worth of the business, an information he or she can use for further benefits. In fact, this information becomes a necessity if the business owner decides for a business sale, a merger or an acquisition. The knowledge of the worth of the business is also required during any business divorce. However, one should always get a business valuation from an authentic service provider. Using an online application is also a wise decision for company valuation. At the same time, the business owner must remember that any misrepresentation of required information of a business valuation can adversely affect the valuation process resulting in undervaluation of the business. It is the responsibility of the business owner to divulge certain information to the valuation service provider to ensure an authentic valuation. Here are five such information needed for a genuine business valuation.

1. Profit and loss statements

The profit and loss statements of five years prior to the point of valuation provides the valuation expert with ample insights regarding the business and its profit-earnings ratio growth over the years. The profit and loss statements reveal the present condition of the business, making it easier for the valuation expert to prepare an accurate business valuation report.

2. Balance sheets

The balance sheet of the business exposes the position of the assets and liabilities which helps the valuation expert to develop a better understanding of the business and evaluate it without any data lapse. Balance sheets are also attached with the final business valuation report with listed inferences from them.

3. Tax returns

The documentation of all the tax returns since five years prior to the valuation time is extremely important for any valuation expert or software to determine the net profit after tax liabilities have been paid off. The worth of any business depends on the punctuality of tax returns.

4. Forecasts and projections

Every business prepares reports comprising of the forecasted earnings from the business on an annual basis. These reports play an important role in enhancing the worth of a business valuation by providing the information regarding the projected worth of the business. Business valuation software are very useful in this regard. Such applications can readily process the forecasts and produce the actual value of the business as per the projected data. These software can also produce a sample business valuation report if an alternate set of projected data is fed into the program.

5. Assets and liabilities

Another piece of important information required for a proper company valuation is the comprehensive list of all assets inventory and also the debts and liabilities of the business.

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